If you have outlying Foreign Bank and Financial Accounts Reports (FBAR) that you have not been able to file, don’t worry! The good news is that there’s a system in place to file FBAR forms from previous years easily from the comfort of your desk. In this post, we’ll show you how.
Common Issues with FBAR Forms
Because of the complicated nature of the subject, it’s normal for people to not know and/or misunderstand the full extent of all FBAR requirements. After all, it’s a lot to take in, and if your finances are spread around a number of different countries, it gets harder to stay organized.
Here are the two most common mistakes made on FBAR filings:
- The $10,000 stipulation does not apply to a single account but to the total of all of your foreign accounts.
- Life insurance policies, pension funds and inherited money are also subject to declaration.
If you’re thinking you might have filing errors on your FBAR forms from previous years – or you haven’t filed them in the first place – rest assured that you can still correct or file FBAR forms with a simple, headache-free process.
How to File FBAR Forms that Are Past Due
There are three main ways to file FBAR forms late depending on your situation.
File FBAR Forms Online Yourself
If any of the below three criteria apply to you, you can file online directly with the IRS feeling confident that there will most likely be no penalty for filing FBAR forms late:
- If you were simply unaware of your responsibility to file FBAR forms, or if you can specify a good reason as to why you didn’t.
- If you have already reported all your US tax returns and paid tax on the income from all of the foreign financial accounts you’ll be naming in your FBAR declaration.
- If you’re not under civil examination or investigation by the IRS, and you have not been contacted by them about any late FBARs.
To file online, you can follow the link to the BSA’s online filing portal where you’ll be given a choice of using a PDF file or an online form to submit your information.
Use Streamlined Filing Compliance Procedures
For slightly more complicated scenarios, you will want to consider using streamlined filing compliance procedures if any of the following apply to you:
- If you unknowingly skipped declarations of your foreign assets and accounts.
- If you have made mistakes with filing FBAR forms in the past.
- If you have not already reported all your US tax returns and paid tax on the income from all of the foreign financial accounts you’ll be naming in your FBAR declaration.
Streamlined Filing allows you to report or amend 3 years of tax returns and 6 years of unreported FBAR statements without incurring a penalty. It is, however, not a very straightforward process and should be handled delicately, which is why it’s best that you seek professional guidance for Streamlined Filings.
Enter the Offshore Voluntary Disclosure Program (OVDP)
If you knew you were supposed to be filing and still chose not to, then the Offshore Voluntary Disclosure Program might be a better option for you.
The OVDP allows you to come clean with the IRS about all the things you haven’t declared, and you will be granted immunity from prosecution as well as avoid any civil penalties.
Since entering this program requires that you submit the last 8 years of your tax returns, it’s best that you consult a tax professional about your individual situation here as well.
Ready to Get Caught Up On Your Late US Taxes?
Our expat-expert CPAs and IRS Enrolled Agents have particular expertise in helping US expats get caught up on delinquent taxes using the Streamlined Filing Procedures or the Offshore Voluntary Disclosure Program. Get started with us today and become compliant on your US expat tax obligation!